IRS Could Begin Taxing Bitcoin and Other Virtual Currencies

The Internal Revenue Service plans to develop more guidance and training materials to inform taxpayers and tax preparers of the tax compliance risks associated with using virtual currencies like Bitcoin and “Linden dollars.” Like what you see? Click here to sign up for Accounting Today's daily newsletter to get the latest news and behind the scenes commentary you won't find anywhere else. A new report from the Government Accountability Office recommended that the IRS develop additional guidance to reduce the tax compliance risks of virtual economies and currencies, such as the type used in online multiplayer games. The GAO report noted that transactions within virtual economies or using virtual currencies could produce taxable income in various ways, depending on the facts and circumstances of each transaction. For example, transactions within a so-called “closed-flow” vir...